Silicon Valley refugees trying entrepreneurial approach to life after the crash
The age range of hopeful entrepreneurs around Santa Cruz County has gained 20 years since the dot-com collapse in Silicon Valley. With large numbers of local residents suddenly out of work and many of them fed up with driving over Highway 17, a growing percentage of the workforce has turned to self-employment.
Five years ago, most people who sought advice for starting their own businesses were in their early to mid-20s, often with far-fetched ideas for generating income, according to Karen Colcagno, president of the local SCORE chapter. Today, the majority of new entrepreneurs are in their 40s and 50s and have well-laid plans for self-employment. The most popular ventures are low-cost start-ups like consulting and home-based service businesses.
"You hear over and over again, 'I'm not going to drive over that hill (Highway 17) again.' Many times, people take skills from Silicon Valley and turn them into their own business," said Mrs. Colcagno.
Strength or weakness of national and local economies seems to have little impact on the number of people wanting to start home businesses in this region. A survey from Washington in the past months found a significant drop-off -- about 20 percent -- in the number of Americans starting small businesses due to a shaky economy. Yet, entrepreneurship keeps soaring in Santa Cruz and Monterey counties.
Mrs. Colcagno and her colleagues host a twice monthly Pre-Business Workshop at the Capitola Chamber of Commerce for anyone wanting to start a business. In the past five years, nearly every workshop has filled the conference room to capacity with 30 new entrepreneurs monthly in Santa Cruz and a similar number in Monterey.
As for how many of them end up successful in business, Mrs. Colcagno estimated that usually two or three participants each month have "pie in the sky" ideas about making a quick dollar and never end up in business, while the others go on and do fairly well.
"It has to do with people's preparedness more than the economy. The truth is, you have to be prepared; you have to think it through. Some people are not willing to do that. We really push business planning," said Mrs. Colcagno.
Bianca Schaut, who is starting a home improvement business called The White Rose, attended the pre-business workshop last month. She admitted that the number of people starting businesses means a daunting level of competition, even in niche markets. She speculated that those who utilize sources like SCORE are apt to be more successful than those who just hang out their shingles and hope for the best.
Ms. Schaut, 38, would prefer to utilize skills she has accumulated through the years to earn a living instead of making a long commute for a job. She was already in business, relying on word of mouth referrals, prior to going to SCORE but hopes to get advice on marketing by taking advantage of SCORE's individual counseling sessions.
Sherri Billings, an accountant in Soquel who assists numerous sole proprietors, reported that there is always a steady stream of new entrepreneurs in the area. Most of them appear to be increasingly sophisticated about running their ventures, especially with the recent shift to an older demographic opting to turn an avocation into a source of income.
"Self-employed people in Santa Cruz are doing as well as could be expected of them," she said, adding that there is always growth in that area of this local economy. She speculated that while many individuals opt to work for themselves and try to minimize the tax implications, most people with serious ambitions have taken advantage of the area's wealth of small business resources and tax advice.
Marketing and financial advice is available at no cost to local entrepreneurs at the Small Business Development Center (SBDC) housed at Cabrillo College in Aptos. Teresa Thomae, SBDC director, estimates that she and her 22 counselors assisted 500 clients last year with either starting their own businesses or expanding existing ones. In total, she handed out 700 business start-up kits and counseled 925 potential self-employment candidates in classes offered by the SBDC.
Ms. Thomae said every entrepreneur should take classes on writing business plans and finances. A good record-keeping system can make or break an entrepreneur, she said, and these systems are not second nature to most individuals.
Ms. Thomae said Santa Cruz's uniquely robust self-employed population is due in part to the region's isolation.
Because of its small-town character, Santa Cruz can present a challenge as a place to make a living. Many people don't want long commutes to San Jose any more, which is part of the reason so many turn to making their own incomes. There is also a large number of residents who have regular full-time jobs but still need extra income to meet high living costs. So, they often turn to starting a small business on the side.